Research Summary

Transparency, Organizational Learning, and Operational Control: Do Zones of Privacy Make Us More Productive?

by Ethan S. Bernstein

Description

Transparency, or accurate observability, of an organization’s low-level activities, routines, behaviors, output, and performance provides the foundation of both organizational learning and operational control. Yet, in a world obsessed with transparency, Professor Bernstein’s first significant finding was that boundaries to transparent observation may sometimes provide unanticipated benefits, and may in fact be an underutilized managerial performance lever.

Using data from embedded participant-observers and a field experiment at the world’s second-largest mobile phone factory (located in China), he found that transparency on the factory floor systematically reduced workers’ performance by 10 to 15 percent as they concealed their activities through codes and other costly means. This finding indicates that creating zones of privacy may, under certain conditions, increase performance. In addition, in a curious phenomenon Professor Bernstein defines as the “transparency paradox,” he finds that less transparent work environments can yield more transparent employees. Those results have been replicated in an increasingly wide range of contexts—from technology companies to retail organizations to knowledge work.

By balancing workplace transparency and privacy, organizations can avoid the “transparency trap” by encouraging just the right amount of “deviance” to foster innovative behavior and boost productivity. Successful companies do this by creating four specific types of privacy boundaries: around teams of people (zones of attention), between feedback and evaluation (zones of judgment), between decision rights and improvement rights (zones of slack), and for set periods of experimentation (zones of time). On-going research continues to dive deeper into how to most productively implement these zones of privacy.